07 June 2015

Parliament’s
recommendations to the European Commission for its Transatlantic
Trade and Investment Partnership (TTIP) talks with the USA will be
debated by MEPs on Wednesday morning and voted at noon. Investor
protection (ISDS) is set to top the debate, with opinions split on
whether Parliament should ask that the use of private arbitration to
resolve disputes between investors and public authorities be excluded
from the deal.

Specifically:

Parliament will vote
on a resolution, drafted by its International Trade Committee with
contributions from 13 other committees, which assesses the progress
made after one and a half years and sets out Parliament’s views on
what needs to be achieved and safeguarded in the Commission’s talks
with the USA in areas such as agriculture, public procurement, data
protection, energy, and labour rights.

However, that draft
resolution has a huge problem: it does not unequivocally reject
investor-state dispute settlement (ISDS), the supra-national
tribunals that allow corporations to sue nations, which means you and
me, since we end up footing the bill.

The good news is that MEPs
are often responsive to their constituents contacting them,
especially if large numbers do so on a particular theme. So I would
like to urge you to write to your MEPs, using WriteToThem, or
directly, to ask them to support amendment 27 calling for ISDS to be
rejected:

to ensure that
foreign investors are treated in a non-discriminatory fashion and
have a fair opportunity to seek and achieve redress of grievances,
while benefiting from no greater rights thandomestic investors;
to oppose the inclusion of investor-state dispute settlement (ISDS)
in TTIP, as other options to enforce investment protection are
available, such as domestic remedies;

I've included below
the letter that I have sent to my MEPs: please feel free to draw on
its arguments, but I urge you to put them in your words: MEPs hate
and will dismiss letters that are carbon copies of others.
Individually-written communications, by contrast, are very powerful.

I am writing to you
ahead of Wednesday's plenary vote on TTIP. The proposed agreement
raises many important issues that the European Parliaments needs to
consider, but here I would like to concentrate on perhaps the most
contentious, that of investor-state dispute settlement (ISDS), and to
urge you to vote for Amendment 27.

Proponents like to
point out that the EU currently has around 1400 agreements with ISDS,
and that its inclusion has not been a problem so far. What this
overlooks is the fact that the vast majority of those agreements are
with developing economies; few if any of those countries' companies
have investments in the EU, and therefore they are unable to use its
measures.

The situation is
entirely different with the US. There are 19,900 US-based
corporations that own more than 51,400 subsidiaries in the EU, any
one of which could invoke ISDS if it is included in TTIP, since the
European Commission's TTIP mandate specifies that ISDS must be
retroactive, and cover existing investments as well as new ones. A
2013 study commissioned by the UK government from the London School
of Economics confirms the risks of ISDS in TTIP: "an EU-US
investment chapter is likely to provide the UK with few or no
benefits. On the other hand, with more than a quarter of a trillion
dollars in US [foreign direct investment] stock, the UK exposes
itself to a significant measure of costs"
(https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/260380/bis-13-1284-costs-and-benefits-of-an-eu-usa-investment-protection-treaty.pdf).

Even before TTIP,
ISDS lawsuits have cost EU governments – and thus the EU public –
billions of euros. According to research carried out by Friends of
the Earth Europe: "The total amount awarded to foreign investors
from EU member states – inclusive of interest, arbitration fees,
other expenses and fees, as well as the only known settlement payment
paid out by an EU member state – was publicly available for 14 out
of the 127 cases (11%) and amounts to €3.5 billion." Since
figures are not available for all the other 113 cases, it is likely that
the total amount paid out by EU countries is much higher. The sums
involved are big, and getting even bigger: in a case last year, an
ISDS tribunal made an award of $50 billion against the Russian
government, the highest so far.

Just as worrying as
the financial implications of ISDS are the chilling effects it has.
ISDS awards can be so large that losing a case brought before these
secretive tribunals is a serious matter for any country. Governments
are therefore naturally keen to avoid bringing ISDS lawsuits down
upon themselves. Companies are well aware of this, and have used the
mere threat of this kind of action to prevent new laws and
regulations being introduced.

For example, in
Canada, a precursor of TTIP, NAFTA, was regularly used to kill off
proposed legislation. As a Canadian government official said
(http://www.thenation.com/article/right-and-us-trade-law-invalidating-20th-century?page=0,5):
"I've seen the letters from the New York and DC law firms coming
up to the Canadian government on virtually every new environmental
regulation and proposition in the last five years. They involved
dry-cleaning chemicals, pharmaceuticals, pesticides, patent
law.Virtually all of the new initiatives were targeted and most of
them never saw the light of day." The European Commission says
that the versions of ISDS used in its most recent agreements, with
Canada and Singapore, have been drafted to avoid these kinds of
cases, but independent research by two groups shows that these claims
don't stand up to scrutiny (available at
http://www.iisd.org/pdf/2014/reponse_eu_ceta.pdf
and http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2613544.)

Given those very
real dangers, the question has to be: why is ISDS even being
considered?

Proponents claim
that it is necessary to include ISDS in order to encourage and
protect investment across the Atlantic. That seems unlikely given
the well-developed nature of the legal systems in both the US and EU.
The actions of the investors themselves proves that in fact the
protection is not just sufficient in theory, but in practice too: in
2013, the US invested 1.65 trillion euros in Europe; Europeans
invested even more in the US – nearly 1.7 trillion euros (European
Commission figures –
http://ec.europa.eu/trade/policy/countries-and-regions/countries/united-states/.)
Clearly, there is no problem that needs solving with ISDS.

Some ISDS supporters
admit that ISDS is not needed for TTIP, but say that it must be
included for future agreements, by which they mean one with China.
This is based on the assumption that it would be EU companies using
ISDS to protect their investments in China; it overlooks the fact
that China is already the world's second-largest economy, and will
soon by the biggest. It is investing massively in Europe, which
means that it would be able to use any ISDS clauses in future trade
agreements against European governments, just as the US would. In
other words, putting ISDS in TTIP purely in order to set a precedent
for a future deal with China actually gets the worst of both worlds.

Finally, it is worth
noting that if investors are really worried about the risks of
putting their money into the US or China they can always take out
investment insurance specifically designed for that purpose, which is
readily available. Since it is the companies that reap the benefits
of their investments, it is only fair that they they should pay for
any insurance to cover it. ISDS is in fact a subsidy from the
European public to those who invest abroad, rather than at home: it
discriminates against EU companies that prefer to put their money
into local economies and to boost local employment, which is surely
not what the European Parliament would wish to achieve.

For all these
reasons, I urge you to support amendment 27 that would take ISDS out
of TTIP. Thank you for your help.

About Me

I have been a technology journalist and consultant for 30 years, covering
the Internet since March 1994, and the free software world since 1995.

One early feature I wrote was for Wired in 1997:
The Greatest OS that (N)ever Was.
My most recent books are Rebel Code: Linux and the Open Source Revolution, and Digital Code of Life: How Bioinformatics is Revolutionizing Science, Medicine and Business.